Financial reporting

  FASB issued a revised standard that addresses investors’ concerns with the financial reporting of repurchase agreements and brings U.S. GAAP accounting for such transactions into closer alignment with IFRS.

Under the updated standard, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, these transactions would be accounted for as secured borrowings and require enhanced disclosures that reflect the transferor’s obligations and risks.

For public companies, the accounting changes under the new standard take effect with the first interim or annual period beginning after Dec. 15, 2014. The disclosure changes for certain transactions accounted for as a sale take effect at the same time. Disclosure for transactions accounted for as secured borrowings is required to be presented for annual periods beginning after Dec. 15, 2014, and interim periods beginning after March 15, 2015.

For all other entities, the changes take effect with annual periods beginning after Dec. 15, 2014, and interim periods beginning after Dec. 15, 2015. The standard is available at

  FASB added two narrow-scope projects to its agenda in hopes of quickly simplifying U.S. GAAP and reducing cost and complexity in financial reporting while keeping reporting useful for investors:

  • Simplifying the measurement of inventory. FASB tentatively decided that inventory should be measured at the lower of cost and net realizable value. Existing GAAP indicates that organizations measuring inventory should consider net realizable value, replacement cost, and net realizable value less a normal profit margin.
  • Simplifying income statement presentation by eliminating extraordinary items. FASB tentatively decided to remove from GAAP the extraordinary items concept. Existing GAAP requires organizations to evaluate whether an event or transaction is an extraordinary item and, if so, separately present and disclose the item.

The board is researching several simplification ideas identified by stakeholders in an effort to reduce complexity. Stakeholders with suggestions for simplifying GAAP for all public companies, private companies, not-for-profit organizations, and employee benefit plans can email suggestions to

  A new group devoted to dealing with transition issues related to the new, converged revenue recognition standard is scheduled to meet twice in 2014 and four times in 2015.

The Joint Transition Resource Group for Revenue Recognition planned to hold its first meeting on July 18 and will consist of financial statement preparers, auditors, and users representing a wide range of industries, geographical locations, and public and private companies and organizations.

The group will meet publicly and advise FASB and the International Accounting Standards Board (IASB) about implementation issues that arise when companies and organizations put the new standard into practice. The group will not issue guidance.

Those with implementation issues for the group to consider can submit them for possible discussion at meetings through the websites of FASB ( and the IASB (

  FASB issued a new accounting standard that relaxes financial reporting requirements for development-stage entities.

The changes are described in Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, available at

The new guidance removes all incremental financial reporting requirements from U.S. GAAP for development-stage entities and removes Topic 915 from FASB’s Accounting Standards Codification.

The presentation and disclosure requirements in Topic 915 will no longer be required in the first annual period beginning after Dec. 15, 2014. Revised consolidation standards will take effect in annual periods beginning after Dec. 15, 2015, for public business entities, and in annual periods beginning after Dec. 15, 2016, for other organizations. Early adoption is permitted for all entities.



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